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Federal Register / Vol. 86, No. 168 / Thursday, September 2, 2021 / Notices
. . . . 19 The Exchange plans to join existing transaction reporting plans, as discussed in Part VIII below, for the purposes of Security quotation and transaction reporting.20 The term NMS
stock means any NMS security other than an option 21 and therefore Securities traded on BSTX would be classified as NMS stock.
Securities would meet the definition of NMS stock and would trade, clear, and settle in the same manner as all other NMS stocks traded today. As described in further detail below, the operation of the BSTX Market Data Blockchain would in no way modify or alter market participants obligations under Regulation NMS.
BSTX Would Support Trading of Registered Securities All Securities traded on BSTX would generally be required to be registered with the Commission under both Section 12 of the Exchange Act 22 and Section 6 of the Securities Act of 1933
Securities Act.23 BSTX would not support trading of Securities offered under an exemption from registration for public offerings, with the exception of certain offerings under Regulation A
that meet the proposed BSTX listing standards.
Issuance and Clearance and Settlement of Securities BSTX would maintain certain rules, as described below, to address custody, clearance and settlement in connection with Securities. All transactions in Securities would clear and settle in accordance with the rules, policies and procedures of registered clearing agencies. Specifically, BSTX anticipates that at the time it commences operations, Securities that are listed and traded on BSTX would be securities that have been made eligible for services by The Depository Trust Company DTC
and that DTC would serve as the securities depository 24 for such 19 17

CFR 242.600b47.
CFR 242.601a1. The Rule states in relevant part that every national securities exchange shall file with the SEC a transaction reporting plan regarding transactions in listed equity and Nasdaq securities executed through its facilities . . . .
21 17 CFR 242.600b47.
22 15 U.S.C. 78l.
23 15 U.S.C. 77f.
24 15 U.S.C. 78ca23A. Section 3a23A of the Exchange Act defines the term clearing agency to include any person, such as a securities depository, who i acts as a custodian of securities in connection with a system for the handling of securities whereby all securities of a particular class or series of any issuer deposited within the system are treated as fungible and may be transferred, loaned, or pledged by bookkeeping entry without physical delivery of securities certificates, or ii
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Securities. It is also expected that confirmed trades in Securities on BSTX
would be transmitted to National Securities Clearing Corporation NSCC for clearing such that NSCC
would clear the trades through its systems to produce settlement obligations that would be due for settlement between participants at DTC.
BSTX believes that this custody, clearance and settlement structure is the same general structure that exists today for other exchange-traded equity securities. Importantly, for purposes of NSCCs clearing activities and DTCs settlement activities in respect of the Securities, the relevant Securities would be cleared and settled by NSCC and DTC in exactly the same manner as those activities are performed by NSCC
and DTC currently regarding a class of NMS Stock.
The operation of the BSTX Market Data Blockchain will have no impact or effect on the manner in which a Security clears and settles. The BSTX
Market Data Blockchain would be implemented through the operation of the proposed BSTX Rules and would occur separate and apart from the clearance and settlement process. The Security would be an ordinary equity security for NSCCs and DTCs purposes. The BSTX Market Data Blockchain would be a separate set of market data that uses distributed ledger technology to record certain order and transaction information regarding orders and transactions in Securities on BSTX.
Issuance of Equity Securities Eligible To Become a Security With the exception of certain offerings under Regulation A that meet the proposed BSTX listing standards, all Securities traded on BSTX will have been offered and sold in registered offerings under the Securities Act, which means that purchasers of the Securities will benefit from all of the protections of registration. The Division of Corporation Finance will need to make a public interest finding in order to accelerate the effectiveness of the registration statements for these offerings. Because BSTX would be a facility of a national securities exchange, all Securities would be registered under Section 12b of the Exchange Act, thereby subjecting all of these issuers to the reporting regime in Section 13a of the Exchange Act.
All offerings of securities that are intended to be listed as Securities on otherwise permits or facilitates the settlement of securities transactions or the hypothecation or lending of securities without physical delivery of securities certificates.

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BSTX would be conducted in the same general manner in which offerings of exchange-listed equity securities are conducted today under the federal securities laws. An issuer will enter into a firm commitment or best efforts underwriting agreement with a sole underwriter or underwriting syndicate;
the underwriters will market the securities and distribute them to purchasers; and secondary trading in the securities that are intended to trade on BSTX as Securities will thereafter commence on BSTX.
Issuers on BSTX could include both 1 new issuers who do not currently have any class of securities registered on a national securities exchange, and 2
issuers who currently have securities registered on a national securities exchange and who are seeking registration of a separate class of equity securities for listing on BSTX as Securities.
BSTX does not intend for Securities listed, or intended to be listed, on BSTX
to be fungible with any other class of securities from the same issuer.25 If an issuer sought to list securities on BSTX
that are not a separate class of an issuers securities, BSTX does not intend to approve such a class of security for listing on BSTX as a Security, pursuant to BSTXs authority under BSTX Rule 26101. However, an issuer would be free to pursue listing of the same class of the Security on another national securities exchange if it so chose, just as the Exchange understands issuers are able to do in respect of their securities today. At the commencement of BSTXs operations, certain equities including ETPs would be eligible for listing as Securities. This would be addressed by BSTX Rules 26102 Equity Issues, 26103 Preferred Securities, 26105 Warrant Securities and the Rule 28000 Series Trading and Listing of Exchange Traded Products, which would be part of BSTXs listing rules and would contemplate that only 25 The Exchange notes that distinct classes of securities issued by an issuer that are Securities would not be fungible with another class of securities of the same issuer because no class of an issuers securities is fungible with a separate class of its securitiesotherwise they would be the same class of security. To the extent that two classes of an issuers shares had identical voting and economic rights but were registered with the Commission as separate classes e.g., Class A shares and Class B shares, the two classes of shares could be economically fungible with one another insofar as they convey the same economic and beneficial rights and interests to investors, but this would not mean that ownership of a Class A share is the same as ownership of a Class B share notwithstanding that each class provides the same economic benefits. In any case, nothing herein proposes any change to the existing framework for different classes of securities.

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